Right decision

By Tony Staley
Compass Editor

Gov. Jim Doyle deserves applause for his decision on March 30 to veto a bill that would have set new standards for the rent-to-own industry. In announcing his decision, Doyle said the legislation would not have adequately protected consumers.

The Wisconsin Catholic Conference opposed the bill, as did numerous agencies who regularly work with the poor.

As John Huebscher, Wisconsin Catholic Conference executive director, noted in his Eye on the Capitol column (3/31), the conference's opposition to the proposal was based in large part on the experience of agencies such as Catholic Charities and St. Vincent de Paul who regularly minister to families in economic need.

"Staff in these agencies advised us that rent-to-own agreements and other transactions that burden people with high interest rates and expensive loan agreements are major causes of financial hardship for low-income families," Huebscher wrote.

Plus, the bill weakened the Wisconsin Consumer Act by permitting self-help repossession and shortening the default period, Huebscher said. By so doing, it opened the possibility that others who lend and sell merchandise would seek a similar exemption.

Another objection to the bill was that rent-to-own firms would no longer have to tell consumers what the annual interest rate would be on transactions. Instead, the stores could mark items with the cost to rent and buy items. A better bill should include both the annual interest rate and a simple statement of what the original and real, final purchase price would be on every item.

Unfortunately, the poor in many ways have to pay a steep price for their poverty. Government cannot solve all these problems, particularly in our free-enterprise, capitalistic society. But government should not be a party to the problem with overly friendly policies for industries such as rent-to-own or payday loans that deal mainly with low-income people.

"It is a tragic fact of poverty that those who are least able to pay for goods often end up paying the most," Huebscher said in his column. "This is especially true when our public policies compound the tragedy by making it easier to engage in transactions that exploit that vulnerability."

With bills like this we need to remember Huebscher's caution: "The proposal to deregulate the rent-to-own industry is an example of one of the steps by which a society abandons its needy."